Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
WESTERN DIGITAL WDC Stock Trend Analysis - CHIA! - Risk 1 - 23rd Jun 21
AMC Is the Best-Performing Stock in America: Don’t Buy It - 23rd Jun 21
Stock Market Calling the Fed‘s Bluff - 23rd Jun 21
Could Bitcoin Price CRASH Target A Bottom Below $7500? - 23rd Jun 21
Bitcoin and cryptos: Your 'long-term investment'? - 23rd Jun 21
Unlocking The Next Stage Of The Hydrogen Boom - 23rd Jun 21
USDT Ponzi Scheme FINAL WARNING To EXIT Before Tether Collapses Crypto Exchange Markets - 22nd Jun 21
Stock Market Correction Starting - 22nd Jun 21
This Green SuperFuel Could Change Everything For the $14 Trillion Shipping Industry - 22nd Jun 21
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Q4 Pivot View for Stocks and Gold

Commodities / Gold and Silver 2017 Oct 14, 2017 - 03:02 PM GMT

By: Gary_Tanashian

Commodities

Reference a post from August 11: Potential Pivots Upcoming for Stocks and Gold Stock Market Status

In the above-linked article we noted several legs that could be kicked out from under the S&P 500’s table in Q4 2017. The stock market blew right through one of them, which was a bearish (on average) seasonal trend for the 2nd half of September. No one indicator is a be all, end all. In sum, they define probabilities. But price is the ultimate arbiter and as of today, price says ‘still bullish’ (says Captain Obvious).


Another leg was the 30 month cycle that has caught 5 of 7 important tops or bottoms (4 tops, 1 bottom) since 2000. As noted when it was first presented, this monthly chart takes into account months of slush in and around the 30 month mark, so it is far from an exact timer. The S&P 500 remains in the window with the September bar now in play.

Another factor was that our measured targets, which we’d plotted when most people were bearish on the market *, had been exceeded. See a post from earlier this week showing more big pictures of US stock indexes and their targets along with global markets, commodities, gold and silver. Most stock market charts shown in the post remain extremely bullish on the big picture (again, Captain Obvious).

As for this chart, targets are never stop signs, but the point is that the bullish measurement is no longer out there in waiting as a bullish factor. It’s long-since in the books.

We also noted the Fed’s rate hike cycle, which had gotten under way but was currently not indicating imminent danger. That is still the case, as the Fed Funds Rate is safely below the 2 year yield, which remains in an uptrend (i.e. no negative divergence). It should be well known that the stock market usually continues to climb in the early stages of a Fed rate cycle.

We also noted that several other considerations make up the 4th leg of the S&P 500’s table. Let’s look at a couple of them. We caught the 2014 USD upturn in real time the US dollar index made a higher high in August of that year. That started the clock ticking on a coming bear phase in the US stock market, which would affect multi-national exporters first and foremost. While there was a sharp correction a couple of months later the market did not really roll over until a year after Uncle Buck first turned up.

But the blue shaded area on the right shows a stark contrast between a declining USD and rising SPX. The logical thinking being that ‘if Trump is planning to reflate through fiscal policy a weaker dollar would be a key underpinning to that’. So I for one do not think it is set in stone that a rise in USD needs to wait a year before it corrects the stock market. However, as our ‘USD bounce’ view finally played out recently, the market had other ideas; it kept going up! That’s show biz folks. So either the stock market is wrong or the reflationary thesis is wrong.

Another 4th leg component is market sentiment, which had been persistently lukewarm. Well, lately it is heating up. Here are the “Smart” and “Dumb” money readings per Sentimentrader‘s indicators. There is no denying that the Trump rally turned the market on its ear as the usual contrary indicators were not contrary at all, post-election. Most recently, Dumb money is buying the rally and Smart is fading again. The readings are finally approaching, though not at extremes. Other sentiment indicators like the most recent (Oct. 10) Investors Intelligence reading on market newsletter writers (60% Bulls, 15% Bears) are well into extreme over bullish territory. The VIX as we know, is pinned to the mat. The market is over bullish, which is a condition for a top, although not a timer for one.

The bottom line is that 2 months after the original article was written, the stock market labors on, sucking in or obliterating all who would deny the bullish case. The Q4 time window is at hand, the Fed is talking hawk (although the funds rate vs. the 2yr yield is still benign), the US dollar is firming and sentiment is pointing toward an extreme over bullish condition. There is not much standing in the way of a market correction except for two important items… price and trend which are both massively positive. Shorting this market is done at great risk until there is a crack in those items (I tried a ‘what the hell?’ limited commitment short yesterday, against long positions).

* I repeat this when presenting a bearish case because perma-bears have been presenting a bearish case at every negative blip in the stock market. I may well be wrong on the Q4 top view, but you will know that the thesis is presented by someone who was appropriately bullish in the depths of the Brexit/NIRP angst of the summer of 2016… using many of the same indicators shown above.

Gold & Gold Stocks Status

In the mirror is counter-cyclical gold and the gold stock sector. We have maintained all through the bear market and into the current potential bull phase that the sector will not be ready for prime time until after the stock market tops out. The gold sector could thrust bullish in unison with a stock market top or it could grind under pressure from market liquidity drainage in the short-term. But make no mistake, the gold sector will shine at some point after the stock market tops (for a hard correction at least).

Here is my favorite cartoon version of some important gold sector fundamentals, the Macrocosm, with the biggest planet out front being the most important to the current situation. The two tiniest planets can be all but ignored as they are the stuff of promotion or lazy analysis.

The most recent surge in speculative markets along with interest rates has pretty much wrecked the sector’s fundamentals once again. Here is just one of several macro views (we also chart gold vs. commodities, currencies and bonds) we use to show a positive or negative backdrop for the gold sector. As you can see, gold vs. stock markets is negative, although Gold/S&P 500 is sporting an interesting MACD divergence.

On Wednesday night we updated the daily and weekly technical status of the HUI index, and little has changed since. Check out the link. It is important to watch the nominal technicals along with the macro technicals like the chart above because the nominal daily technical situation is likely to lead the weekly macro fundamental situation.

We’ll close with big picture monthly views of nominal gold and HUI. Gold did rise after the original ‘pivot’ post and projecting it to find resistance in the high 1300s was easy, as this is a key line between a bear and bull market. It was not going to be given up easily, especially with speculation running too hot amid the Trump/Rocket Boy hysterics. You do not buy gold on geopolitical hype. Shorter-term charts show that gold pulled back to support in the mid-1200s and can renew its rally.

HUI monthly has been grinding the mid point of the Bollinger Bands as it tries to establish a new bull phase using that parameter as a marker (green arrows) as it did during the bear market (red arrows). Huey is currently below that point but it routinely jabs down below it in-month.

Why not finish with a chart of the ratio between these two items, the HUI/Gold ratio. While the daily HGR is grappling for support between its 50 and 200 day moving averages, the monthly view shows a bullish looking pattern we have been tracking for several months now. This ratio is a key leading indicator for the sector.

The bottom line is that the gold sector is stable and in waiting for difficulties in the stock market and other heavily gamed areas of the investment world. If markets begin a routine but persistent correction the gold sector need not get sucked down with stocks. If we have a classic fall liquidity event, the gold sector could take a hit before a sustained rally takes place. If on the other hand the stock market mania continues firmly in the weeks and months ahead, the gold sector will wait until the massive asset speculation (i.e. generalized bubble) terminates before it offers anything special for investors.

That is why it is best to have patience, at least for the next couple of months, considering that gold’s seasonal average bottoms in December or January. As with the September stock market seasonal, this can be taken with a grain of salt. But that’s what we do in markets; we use as many tools as possible to refine probabilities.

While my Q4 ‘macro pivot’ view is still viable, my view that the gold sector is in wait for whenever the macro speculative environment blows out remains firm. In that event gold would out perform most assets and so, improve sector fundamentals for the miners. The HUI/Gold ratio above is all about such leverage. If it goes bullish as its pattern implies, that leverage will be on display. That is why we are keeping tabs on 29 different gold stocks each week, with the majority being of relative quality.

If you are thinking of subscribing to NFTRH, do so before the rate for this relatively value-priced service increases, albeit modestly. As pertains to the gold sector, we managed risk to an extreme in 2012 to avoid the bear market and hold on to gains. Today I look forward to working with you in seeking profits from the uniquely counter-cyclical sector. First, markets must pivot.

Subscribe to NFTRH Premium for your 40-55 page weekly report, interim updates and NFTRH+ chart and trade ideas or the free eLetter for an introduction to our work. Or simply keep up to date with plenty of public content at NFTRH.com and Biiwii.com. Also, you can follow via Twitter ;@BiiwiiNFTRH, StockTwits, RSS or sign up to receive posts directly by email (right sidebar).

By Gary Tanashian

http://biiwii.com

© 2017 Copyright  Gary Tanashian - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Gary Tanashian Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in